The Law Magazine - COVID-19 SPOTLIGHT ON - WP Feb
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M & A F E A T U R E
®
SPOTLIGHT ON
COVID-19
Vol 21 No 1, Quarter 1 2021 The Law Magazine
MULTI-SECTOR EXPERTISE
Fit-for-purpose solutions to your
most complex legal and tax challenges.
in alliance with
March 2021 1
W ithout prejudice is officially supported by a num-
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EDITORIAL This does not mean that the opinions carried in
Editor: Myrle Vanderstraeten without prejudice in any way reflect those of the sup-
Sub-editor: Gail Schimmel porting firms. Indeed, without prejudice’s editorial inde-
Proofreader: Lee Robinson pendence and integrity is jealously guarded.
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Eben van Wyk and Vaughn Williams
provides direction and counsel and meets three times a year.
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4| Editor’s note
The editor’s views
Feature
Mergers & Acquisitions
MYRLE VANDERSTRAETEN
Spotlight on COVID-19
Company Law
Leadership
25 | B-BBEE compliance targets
5| Leadership during the pandemic The B-BBEE Scorecard
SALLY HUTTON AND CHRISTO ELS – WEBBER WENTZEL
JACKIE KITCHING AND ZAHN ABREU – RSM (SOUTH AFRICA)
Advertising
26 | A suspensive condition or not
8| Advertising in a COVID world
Municipality of Mhlontlo v TDH Tsolo Junction
GAIL SCHIMMEL – ARB
(1086/2019) [2021] ZASCA 3
THATO MASHISHI – KPMG (SOUTH AFRICA)
Mining Law
9| Mining Law in the midst of a pandemic
27 | When does a surety's right of recourse
LILI NUPEN CHANTAL MURDOCK NICOLE LIMBERIS-RITCHIE AND
arise?
CALVIN MATLALA – NUPEN STAUDE DE VRIES
Zungu-Elgin Engineering (Pty) Ltd v Jeany
Industrial Holdings (Pty) Ltd and Others
Company Law
12 | Taking stock of virtual shareholder
(1138/2019) [2020] ZASCA 160 (3 December
2020)
meetings
KYLENE WEYERS – CLIFFE DEKKER HOFMEYR
JOHANN PIEK
Contract Law
14 | Business Rescue during the COVID-19
pandemic – how to make it work 28 | Counter-application vs collateral
KYLENE WEYERS – CLIFFE DEKKER HOFMEYR
challenge
Gobela Consulting CC v Makhado Municipality
Technology (910/19) [2020] ZASCA 180 (22 December
16 | Digital transformation in Africa through 2020)
USHIR AHIR AND CLINTON MPHAHLELE – LAWTON AFRICA
the lens of COVID-19
RIETTE ENGELS-VAN ZYL AND ZAAKIRA HAFFEJEE –
LAWTONS AFRICA
Employment Law
29 | A real 'whodunnit'
Opinion Goldplat Recovery (Pty) LTD v Commission for
18 | Surreal pandemic Conciliation Mediation and Arbitration &
HAPPY MASONDO Others (Unreported case no. JR 488/2019, 26
January 2021)
Employment Law NEIL COETZER AND SECHABA MOTLOUNG –
20 | 10 Fundamentals for vaccinations… COWAN HARPER MADIKIZELA
EMPLOYMENT LAW TEAM – CLIFFE DEKKER HOFMEYR
31 | To speak or not to speak
Observation Can employee can be compelled to provide
22 | Reflections on our first year self-incriminating evidence
MARICIA SMITH AND TRISTAN MAROT - LHL & NORTON ROSE JJ VAN DER WALT
FULBRIGHT (SOUTH AFRICA)
32 | It's annual leave Karen…
23 | 5 Reasons why I love lockdown & 5 Ludick v Rural Maintenance [2014] 2 BLLR
Reasons why I don't 178 (LC)
JOHN MCKNIGHT – SPOOR & FISHER JOHAN BOTES – BAKER MCKENZIE (SOUTH AFRICA)
contents
33 | When the labour court cannot reinstate Intellectual Property Law
Edebery v National Youth Development 46 | Oceans Apart
Agency (J1453/2020) [2021] ZALCJHB 1 Open Horizon Ltd v Carnilinx (Pty) Ltd,
(7 January 2021) Gauteng High Court (66901/2019) [2020]
PHUMZILE ZIQUBU
ZAGPPHC 674 (20 November 2020)
HANS MUHLBERG
Pension Law Law of Succession
34 | The GEPF fails its members
47 | From what constitutes a parent to
In the face of being forced to forfeit part of
soundness of mind: three fiduciary-
their retirement benefits
related court case summaries by FISA
CLEMENT MARUMOAGAE – UNIVERSITY OF THE
Wilsnach N.O v TM and others [2020] JOL
WITWATERSRAND 49017 (GP); Tshaka N O & others v Standard
Bank of South Africa Limited & another ZASCA
Financial Law 73 (25 June 2020); Vermaak NO and Another v
36 | Checking out Jacobs and Others [2019] ZAGPJHC 346
The demise of the cheque LOUIS VAN VUREN – FISA
CIRESH SINGH
Tax Law
Human Rights Law 49 | Keeping tax payer information secret
38 | Mandatory premarital medical A cornerstone of tax systems – but there are
examination of spouses to a Muslim exceptions
marriage – a slippery slope GRAEME PALMER - GARLICKE & BOUSFIELD
Consanguineous marriages and the positives
and negatives of premarital medical testing 51 | SARS refunds - the game is afoot
When the refund process is unnecessarily
ASHRAF BOOLEY – UNIVERSITY OF THE WESTERN CAPE
dragged out
RUAN BOTHA – TAX AFRICA
International
40 | Tales from the US of A The Law
Legal happenings in the US
52 | Comply or face the music!
PATRICK BRACHER – NORTON ROSE FULBRIGHT (SOUTH AFRICA)
Ndabeni v Municipal Manager: OR Tambo
District Municipality and Another (1066/19)
42 | The World in January/February [2021] ZASCA 8 (21 January 2021)
Global vignettes JACQUIE CASSETTE AND GIFT XABA – CLIFFE DEKKER HOFMEYR
MYRLE VANDERSTRAETEN
54 | The fight against GBV - three new Bills
Insurance Law Strengthening the existing legislative response
43 | Effective Internal Complaints BRIGITTA MANGALA AND AKHONA MGWABA –
Management CLIFFE DEKKER HOFMEYR
Escalating complaints – new policy holder
protection rules National news
PAUL VAN ONSELEN 56 | Legal firm news
Cover Deal activity
44 | Inkunzi Yenkabi - Richard ‘Specs’ 59 | A selection of who did what in
Ndimande January/February
DEALMAKERS
THE CONSTITUTIONAL COURT ART TRUST
Cover: Artwork: Richard ‘Specs’ Ndimande (1994–), Inkunzi
Yenkabi, 2019, pen and ink on paper, 1030 x 740 mm.
Litigation Law Constitutional Court Art Collection (CCAC). Donated by the artist
45 | Litigation finance enhances access to in 2020. Cover image courtesy of the artist and the
justice Constitutional Court Trust. For more information, visit
Litigation funding - where the opportunities lie ccac.concourttrust.org.za or follow @concourt_art on Instagram
SIPHOKAZI KAYANA – CMS (SOUTH AFRICA) and Twitter.
contents
4 March 2021
Editor’snote
A
t midnight on Thursday 26 March 2020, South Africa National Assembly. Violence against anyone, of any sex or age,
went into a country-wide lockdown that was expected is abhorrent. That behind the smiling mask of someone we
to last 21 days; little did we know how dramatically ‘know’ lurks a monster is a fearful thought. I recently read about
life would change and that nearly a year later, as without prej- an interview with a celebrity who was, for many years, in an
udice is published, we would still be in lockdown, albeit in a abusive relationship. Her comment was that victims should not
less strict format. During this period, over one and a half mil- be asked why they stayed, but rather that perpetrators should be
lion people in South Africa have contracted the disease and, of asked why they held their partner hostage. But, if we don’t
those, more than forty-nine and a half thousand people have understand why people stay, how will it be possible to do what
died. According to the WHO (World Health Organisation), as society apparently doesn’t know how to do – talk to the sur-
at 25 February, globally, 112 million people had contracted the vivors about their ordeals? According to an American organisa-
coronavirus – two and a half million of whom have lost their tion, CDC, one in four women and one in seven men will be
lives. Those are bleak figures. victims of domestic abuse in their lifetime. It is to be hoped that
Would it have made any difference if the Chinese authori- these Bills will result in perpetrators being held accountable.
ties had listened to Dr Li Wenliang when he drew attention to Despite our President’s best intentions, it appears to most of
the infections, instead of demanding us that those who have been party to cor-
that he sign a statement denouncing his ruption are unlikely to pay a price – or be
warnings? Maybe not, but we will never obliged to return what they received or
know if fear of loss of face resulted in took illegally. The trial for erstwhile
this horrific war being waged on South African President Zuma is set
mankind by an invisible foe. That is a down for May – we will not hold our col-
terrible thing for anyone with a con- lective breath. After all, this started in
science to live with. 2005. Accountability is supposed to be a
While there is talk of fewer restric- cornerstone of democracy – if our politi-
tions over the European summer, cians, and others who are expected to set
Australia talks of opening its borders in an example of honesty, are not held
October, while other Australian author- accountable, can South Africa truly
ities are more sceptical and talk of 2022. claim to be a democracy?
What is certain is that everything This is the first quarterly issue of with-
remains uncertain. out prejudice. I am, as always, very grateful
Since COVID-19 remains front of to practitioners who write interesting arti-
mind for us all, without prejudice puts cles, often on unusual aspects of legal mat-
the spotlight on various issues related to that. I asked Sally ters, for the publication. Writing for without prejudice is certainly
Hutton and Christo Els, who head up Webber Wentzel, to good for firm and practitioner marketing but, equally importantly,
write on the challenges of leadership during this time. Their it provides information that comes from knowledge. For many
frank appraisal of their roles over the past year makes for great practitioners, writing is a creative outlet, even on legal topics –
reading. I am very grateful to all the practitioners who wrote the challenge is to hold the readers’ attention, sometimes surpris-
for this section – the topics range widely and I believe this is ing the editorial team with how interesting the article is, despite
the most interesting collection of articles on COVID-19 that I an initial dryness of topic. Above all, writers ‘pay forward’ knowl-
have read. The section ends with an article by John McKnight edge to those who may not have the same resources. In recent
of Spoor & Fisher who, articulately, sums up pretty well exactly years, acquiring information for free has become expected.
how most of us feel. Unfortunately, providing that information to readers cannot be
Another scourge that has become increasingly worrying is done on ‘love and fresh air’. without prejudice now has several
that of violence. Brigitta Mangala and Akhona Mgwaba of sponsorship levels which, over four quarters, makes it eminently
Cliffe Dekker Hofmeyr write that there are three new Bills – affordable for firms and individuals to ensure the future of the
the Criminal Law (Sexual Offences and Related Matters) magazine way beyond this, its 20th year in publication. ◆
Amendment Bill, Criminal and Related Matters Amendment
Bill, and the Domestic Violence Amendment Bill – before the MYRLE VANDERSTRAETEN
March 2021 5
COVID-19/leadership
Leadership in a year without
precedence
S A L LY H U T T O N A N D C H R I S T O E L S
Teams roll-out and testing holding
A discussion on leadership in a year without precedence. our Board and Excom meetings
over MS Teams. As a result, when
President Ramaphosa made the
hard lockdown announcement, we
What have you found most challenging and what, to your were ready to go. We moved the
surprise, was most easily resolved? entire firm to remote working in
Sally Hutton: I was surprised how quickly everyone adapted to work- just two days.
ing remotely. I had expected a few more teething issues, particularly in We are very proud of how our
some of our business services functions, which have always operated on teams rose to the challenge to
site. But on 31 March 2020, just after the start of hard lockdown, we ensure that our firm continued to
performed our entire month-end process remotely for the first time deliver the same excellent client
ever and it was completely seamless. That said, for me, the greatest service and proactive commercial
challenge has been the loss of variety in my day-to-day workday. I was advice that our clients have come
accustomed to a work week that incorporated travel between our to expect. Although this has been Hutton
Johannesburg and Cape Town offices, lots of in-person meetings and a tough time for everyone in some
other face-to-face engagements (e.g. lunches and client functions), a ways, it has also inspired us and
mix of conference calls and other interactions and a lot of physical brought us closer together. We’ve
movement from one place to another. These days, I find that I can discovered what we can really do
spend 12 hours consecutively just sitting at my desk and looking at a when we really pull together,
screen, because all of these activities are now done over MS Teams, reach out, help one another and
Zoom and Webex. I do miss the variety. try new ways of working and com-
municating.
Christo Els: Formal meetings with clients and firm management activ-
ities progressed surprisingly well using MS Teams and, in many cases, Did the increased use of
better than before, due to the ease of attendance. However, law firms technology by law firms
are fundamentally people businesses and driving culture and creating a mean the technology that
sense of togetherness was more challenging. I learned a lot during the was initially required, and
year, related to creating new opportunities for access and strengthening which continues to be need-
connection between our people, which should endure into the future. ed, was completely adequate
Els
These opportunities must also constantly evolve, as new ideas quickly to meet the demands, and
become old, which is both challenging and exciting. the security available appro-
priately – despite some issues probably never having been
How was the firm, in the very short space of time everyone anticipated?
was given, able to meet the extreme challenge of complete As stated above, we were well prepared from a technology perspective,
lockdown? and had been working on increased remote and flexible working for
The firm had already made a very significant investment in technology some time. We have an excellent IT team which has ensured we have
over several years, to facilitate remote and flexible working, and we the best technology to support our clients, and that our systems are
had already implemented a flexible working policy. Fortunately, we had secure.
already rolled out MS Teams to our business services teams – largely to Despite key institutional readiness, there are still issues related to
enhance the efficiencies of internal meetings – and we were starting to connectivity quality in parts of South Africa which are and remain an
roll it out to our legal services teams before the COVID-19 crisis hit. A issue. These were, however, anticipated. What we are now focusing on
month before hard lockdown, we had already started preparing the firm is managing the more human aspects of managing this hybrid approach
for a fully-remote working solution, including by accelerating our MS to work.
6 March 2021
COVID-19/leadership
How were you able to lead effectively when everyone, at tise to Business 4 South Africa to collaborate with government on
least initially, not only had to work remotely but also faced issues related to the lockdown regulations, and to drive a co-ordinated
both professional and personal challenges? and proactive programme to limit the economic, social and health
Our methodology in approaching any complex challenge is to craft a impact of COVID-19 on the country. Our pro bono team also assisted
multi-pronged strategy. Our COVID-19 strategy focused as much on families who were subjected to unlawful evictions as a result of
communicating, connecting and supporting our people as it did on COVID-19 lockdown laws, and they also supported NGOs trying to
measures to manage liquidity. access social grants.
We have taken several active steps to make all our people feel more
connected this year and to raise morale. We have held regular town How were you able to assist in ensuring that new CAs feel
halls and communication sessions between ourselves and each area of part of the Webber Wentzel team?
our business, we send a monthly (and weekly) newsletter to the firm, as It is definitely more challenging to integrate newcomers, including our
well as regular newsflashes, and we have held a number of firm talks CAs, into a remote working environment. Our new CAs started on 1
(e.g. Siya and Rachel Kolisi spoke to all of us and our families, which February 2021, in the midst of Level 3 lockdown, and have been
was a real hit). One of our initiatives was to relaunch our “Know my encouraged to work from home where possible. Our teams are making a
name, Know my story” initiative, where we encourage our staff to share special effort though, to make them feel welcome, and our new CAs
their unique stories, to get to know each other a little better. Every day, will, in turn, also need to make an extra effort to connect with their
we posted someone’s story to the whole firm, which has allowed us to teams. We asked each of the CAs to do a brief video introducing them-
celebrate our diversity and appreciate the people we work with. We selves to the firm, and our people have been able to interact with the
have also done lots of fun things for the whole firm using the MS videos to get to know them. Our CAs are also encouraged to get
Teams functionality – e.g. Tik Tok challenges (the two of us even did involved in various firm initiatives like the Webber Wentzel
one in hard lockdown), photo sharing, puzzles, quizzes, etc. Leadership Network, which is an internal firm initiative that creates a
platform for informed dialogue to inspire, educate, and support the
How did you ensure that those practice heads who are development of future leaders. The resilience and flexibility that this
inclined to work in silos became more collaborative? batch of CAs will have learnt in this period will, of course, be hugely
Collaboration and teamwork is one of our core firm values and clients valuable in their future careers.
often comment that this is a distinguishing feature of working with
our firm. All of our structures and processes are designed to foster bet- What is your personal ongoing ‘grey hair’-inducing area?
ter collaboration. Our sector approach is an effective way to drive col- Sally Hutton: We have had to work extra hard at maintaining culture
laboration between the various practice areas. Our sector heads drive in an environment when people spend a lot of time apart, in order to
activities around clients operating in a specific ecosystem, where they avoid drift and disengagement. Although there are some obvious posi-
face similar challenges and opportunities, and where solutions can be tives that have come from the work-from-home shift, people still do
implemented across the sector. We also created platforms to enable benefit enormously from personal interactions and being apart can
meaningful conversations in pursuit of opportunities, and to provide erode a firm’s cultural glue, if you don’t work hard at keeping connec-
access to relevant industry information, key developments and topics tions strong. People can also feel a bit stuck in a rut and may be open
of interest to our active sectors. We actually found that, in some ways, to making moves just for the sake of a change – as leaders, we there-
remote working drove more collaboration, because people had more fore need to work even harder to make people feel connected and
time on their hands to participate in firm initiatives. For instance, we motivated.
had over 90% attendance at a number of the partner meetings we
held last year. Christo Els: For me personally, I have struggled to separate home and
work life. I have tried to overcome this by consciously moving my
Has any practice area been busier than anticipated? “office” to different parts of the house from time to time and structure
Merger and acquisition activity was definitely impacted, although this “no screen time” when the opportunity presents itself. As a colleague
improved in the second half. Areas like dispute resolution, banking and leader, I also miss the ability to have chance interactions with
and finance, and restructuring were extremely busy – although not partners and employees, now very restricted by remote working. So
unexpectedly. We actually launched an integrated restructuring and often, these chance interactions help create awareness of concerns or
insolvency offering during last year, which has been very well received problems people may experience. Although we try to overcome this by
by the market. having regular gatherings and interactions over MS Teams, it remains a
On the pro bono side, a team of our healthcare specialists contributed challenge requiring constant attention. ◆
to help kickstart the National Ventilator Project (NVP) to build
20,000 ventilators and is currently supporting the Department of Hutton is Managing Partner and Els
Health on vaccine procurement. Together with many other businesses, Senior Partner of Webber Wentzel.
including the five largest law firms in South Africa, we lent our exper-
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8 March 2021
COVID-19/advertisinglaw
Advertising in a COVID World
GAIL SCHIMMEL
headlines and not the decision. The matter was Fly Safair – Lee Barnard
I
think that it is safe to say that there is not an area of (23 October 2020), and we described the ad in question as follows:
During the commercial, the voice-over states: “For too long we’ve put
our lives that COVID has not affected – and the world
special moments on hold, but now it’s time to go say hello to the family
of advertising regulation is no different.
you haven’t seen in ages. To the friends you’ve missed, and to your
favourite holiday destinations. It’s time to fly again South Africa. Let’s
spread our wings. FlySafair, for the love of flying”. During this mono-
At the beginning of the pandemic, government approached the
logue, the scenes change from passengers (wearing face masks) boarding a
Advertising Regulatory Board (ARB) and asked us if we didn’t need
flight, and being directed to their seats by flight attendants (wearing masks
to urgently add something to our Code. The truth of the matter is
and gloves), to a group of people embracing outside (no gloves or masks
that the Code of Advertising
visible), to another group of people embracing indoors (no gloves or masks
practice, based on years of local
visible), and finally to a group of friends enjoying cocktails beside a pool
and international experience, is
(no gloves or masks visible).
really quite a remarkable docu-
ment that caters for situations The complaint was around the lack of masks and social distancing.
that it didn’t even know could
The Directorate referred to the relevant regulations at the time and
happen. We didn’t have to
then said:
change the Code when social
The opening scene of the commercial shows people boarding a plane, and
media was invented, and we
it is clear that all passengers and crew are wearing masks. This sets the
didn’t have to change the Code
tone, and reinforces the notion that masks are to be worn in public spaces
to deal with COVID!
and when making use of public transport. The viewer is aware that this is
We tend to receive two types of
not an “old” commercial – this is a commercial set in a time of Covid and
COVID-related complaints. The
the depicted behaviour is in line with Covid regulations. The failure to
first is advertising that makes mis-
show masks in the subsequent scenes therefore may imply to some viewers
leading claims about COVID
Schimmel that once you are on holiday, the rules no longer apply, and you may
and/or its prevention and cure.
remove your masks and ignore social distancing protocols, going so far as
Listen, ads telling lies is a problem
to hug your family and friends. Finally, the Directorate gave some thought
as old as advertising itself, and our clauses on misleading claims and
to whether alternative executions were available to the Advertiser, and
substantiation are well equipped to deal with these issues. Much more
found that they were. There is no reason that the same message could not
interesting is the second type of complaint, which is around the
have been portrayed with the use of the early footage of the travel, and
behaviour of the characters in a commercial around COVID protocols
appropriate landscape shots or voice-over. The commercial is therefore in
and regulations.
contravention of Clause 3.3 of Section II of the Code. Given that the pur-
There are two main clauses of the Code that we would typically rely
pose of the regulations is to ensure the safety of citizens from the Covid 19
on if we received a valid complaint in this area:
virus, the commercial is also in breach of Clause 13 of Section II of the
3.3 Legality
Code.
Advertisements must not contain anything which might lead or lend
support to criminal or illegal activities, nor should they appear to con- Cue panic from industry.
done such activities.
We then issued the following notice, to assist advertisers and advertis-
And
ing law practitioners:
13. Safety
“ARB Clarification on the implication of the FlySafair decision
Advertisements should not without reason, justifiable on educational or
Following a number of queries, the ARB wishes to unpack and clarify the
social grounds, contain any visual presentation or any description of
implications of the recent Fly Safair decision around masks.
dangerous practices or of situations which show a disregard for safety.
First and foremost – this does not create a blanket rule that all
Special care should be taken in advertisements directed towards or
actors in all ads must wear masks.
depicting children or young people.
It also does not have any implications around the rules of behaviour on
Towards the end of last year, we issued a decision that caused a bit of set – this is beyond the ARB’s jurisdiction.
a stir in the advertising community – possibly because they just read the The ad in question, however, had a very specific issue:March 2021 9
COVID-19/advertisinglaw
The ad opens with people wearing masks. The viewer is immediately The advertiser tried to fix this with a disclaimer, but the disclaimer
cued that this is the present, and depicts a world where the Covid was very small and very brief.
regulations apply. What they are seeing is neither pre-Covid, nor a
fantasy. It is now, and reflects Covid Regulations; What could you do in a similar situation:
Then the people arrive at their holiday destination and are NOT A big, bold disclaimer that nobody can miss;
wearing masks. This creates the impression that in this Covid Clear clues that the ad takes place in a pre-Covid world, or a fantasy.
world, once you are on holiday, there are different rules. You can “Christmas 2019” it might say on the screen, for example.”◆
hug and not wear masks – because the people in the ad were keep-
ing the rules before, the viewer may believe that they are either still
keeping the rules, or that it is generally accepted that the rules can Schimmel is the CEO of the Advertising Regulatory Board. She remained
be relaxed once you are on holiday. appropriately socially distanced while writing this article.
COVID-19/mininglaw
Mining Law in the midst of a pandemic
L I L I N U P E N , C H A N TA L M U R D O C K , N I C O L E L I M B E R I S - R I T C H I E A N D C A LV I N M AT L A L A
Meaningful consultation and the processing of mining and
T
he COVID-19 pandemic has tipped the world prospecting right applications
into social and economic turmoil. Following the The Mineral and Petroleum Resources Development Act, 2002 (the
announcement of the national lockdown in MPRDA) read with the Mineral and Petroleum Resources Development
March 2020, the operation of the South African mining Regulations, 2004 (the MPRD Regulations) contemplates that once an
industry, including ancillary and production activities application for a mining or prospecting right has been accepted by the
relevant Regional Manager of the
relating thereto, was largely suspended, save for those
Department of Mineral Resources
operations concerning the generation of coal-fired elec- and Energy (the DMRE), meaning-
tricity, and the production of gold. ful consultation with interested and
affected persons must be conducted,
in terms of the public participation
While the price of certain minerals and commodities increased dur- process prescribed in the
ing this time of uncertainty, other prices fell due to a decrease in Environmental Impact Assessment
demand, as economic activity across the world stagnated. As the Regulations promulgated in terms
national lockdown eased and mining operations slowly returned to of s24(5) of the National
full production, there was a significant concern by industry role play- Environmental Management Act,
ers regarding, inter alia, the impact of COVID-19 on the commit- 1998 (NEMA). Not only were min-
ments made to mine communities, and the health and safety of mine ing activities halted or slowed in
employees who would be required to recommence with their ordinary the second quarter of 2020, due to
employment activities. In what follows, we consider some key devel- the national lockdown, but the pro-
opments that the pandemic has had on mining law over the last year, Nupen cessing of accepted mineral right
in relation to: applications by the DMRE, includ-
meaningful consultation and the processing of mining and prospecting ing the required consultation process that was to be followed by the appli-
right applications; cants, had to be held in abeyance due to the inability of applicants to
the health and safety measures required to mitigate the impact of the properly and meaningfully consult during this time, given the restrictions
outbreak of COVID-19; and on public gatherings and social distancing requirements.
the potential unintended non-compliance issues that followed, or may In this regard, the Minister of Mineral Resources and Energy issued
follow, due to the temporary cessation of operations. directions under the Disaster Management Act, 2002 (the DMA) advis-10 March 2021
COVID-19/mininglaw
ing that certain administrative func- ing COVID-19 at the mines and, in turn, infecting their families and sur-
tions and prescribed processes in rounding communities. This ultimately gave rise to an urgent application
terms of the MPRDA, were to be initiated by the Association of Mineworkers and Construction Union
placed on hold during the initial (AMCU) against the Minister (Association of Mineworkers and
lockdown phase of the pandemic. Construction Union v Minister of Mineral Resources and Energy and Others
In addition, the Department of (J427/2020) [2020] ZALCJHB 68; (2020) 41 ILJ 1705 (LC); [2020] 9
Environment, Forestry and Fisheries BLLR 929 (LC) (4 May 2020)), in terms of which it was argued that the
(DEFF) worked tirelessly to provide regulations and directions that had been issued to inform the return of
guidance in the form of various mine employees to work were inadequate.
directions issued under the DMA to AMCU highlighted the fact that section 9 of the Mine Health and
enable processes to continue where Safety Act, 1996 (the MHSA)
it was possible to use alternative empowers the Minister and the
methods to solve the consultation Chief Inspector of Mines to impose
dilemma. Face-to-face alternatives, binding obligations on employers,
Murdock such as the use of video conferenc- and that the powers afforded in terms
ing platforms which were attempted of this section ought to have been
by many applicants, remained a challenge, particularly within mine com- exercised to impose compulsory and
munities where access to internet connectivity is not readily available. specific measures on employers to
Although consultation has since resumed, alternative methods of such better protect mineworkers from the
consultation have had to be COVID-19 pandemic whilst at work.
embraced and implemented, particu- The Labour Court agreed with
larly given that gatherings remain AMCU’s sentiment and confirmed
prohibited, even under Adjusted that the directions published by the
Alert Level 3. It is anticipated that Minister were inadequate, and did
there may be a number of mining not support the fundamental purposes
and prospecting rights that are granted of the MHSA. It was determined Matlala
in the future, which may be chal- that a code of practice under s9 of
lenged by interested and affected par- the MHSA would be the most appropriate measure to ensure that COVID-
ties on the basis that meaningful 19 risks were addressed effectively across all mining operations. A further
consultation did not take place. benefit of this would be that the Chief Inspector would have the authority
Furthermore, despite the lock- to review the code of practice and instruct an employer to amend any code
down being eased significantly, we of practice which did not comply with what had been prescribed.
have noticed that the submission of This judgment led to the Chief Inspector issuing Guidelines for a
applications and other documenta- Mandatory Code of Practice on the Mitigation and Management of
tion at the offices of the DMRE has Limberis-Ritchie COVID-19 under s49(6), read with s9(3) of the MHSA requiring
remained difficult due to continued employers to prepare and implement a mandatory code of practice, to
temporary office closures resulting from ongoing COVID-19 infections, mitigate the impact of COVID-19 on the health and safety of employees.
and rotational-based shifts that have been implemented by the DMRE to The objective of this Guideline is to assist employers, as far as reason-
promote social distancing. ably practicable, to establish and maintain a COVID-19 prevention, miti-
gation, and management programme at mines. The publication of the
The health and safety measures required to mitigate the Guideline made it mandatory for an employer to prepare and implement
impact of the outbreak of COVID-19 an appropriate code of practice, addressing and detailing, as a minimum,
In late April 2020, further directions were published by the Minister. the following key elements:
These placed a duty on employers conducting mining operations and risk assessment and review;
related activities to develop and implement a standard operating proce- start-up and on-going procedure for mines;
dure (SOP), in terms of which appropriate measures were to be put in COVID-19 Management Programme;
place to protect the health and safety of employees during the pandemic. monitoring and reporting; and
Unfortunately, the directions were neither specific nor informative in compensation for occupationally acquired COVID-19.
terms of the content of the SOP, and required only that the measures
contained in the SOP were to be developed in consultation with organ- The potential unintended non-compliances that followed, or
ised labour or representatives of employees at the mine. may follow, due to COVID-19
These directions were regarded by several employees and trade unions In addition to the developments in the law already mentioned, a number of
as insufficient, particularly because of the high risk of employees contract- practical challenges have arisen. For example, some mining companies haveSponsorship Opportunities
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Editor: Myrle Vanderstraeten Twitter and other areas of social media.
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COVID-19/mininglaw
recently found themselves unable to mine in accordance with their approved for the unforeseen consequences that have, and still will, arise as a result
mining work programme, due to the temporary cessation and disruption of of COVID-19 and, at the very least, to engage the DMRE with regards to
operations over the past year. The national lockdown, and the slow ramp up deviations from approved authorisations. As approved SLPs now need to
due to capacity restrictions, has resulted, or may in the future result in the unin- be reviewed every five years, it is also highly likely that, in future, SLP
tended contravention of s25(2)(c) of the MPRDA. This, in turn, may expose commitments will be required to be aligned with municipal LED projects,
the holder of the right to receipt of non-compliance directives and orders. centred around strategic COVID-19 economic recovery projects.
COVID-19 has also made it exceptionally difficult for mining right
holders to comply with, and fully implement, the commitments in terms Conclusion
of approved Social and Labour Plans (SLPs). This has been compounded Until such time as the COVID-19 pandemic is defeated, these develop-
by the challenges experienced in respect of conducting meetings with ments and challenges remain relevant. It is recommended that all mining
mine communities and interested and affected persons during the pan- and prospecting right applicants, and holders of these rights, retain com-
demic, which is now required pursuant to an amendment to the MPRD plete and proper records of all consultations conducted electronically, and
Regulations. Failure to comply with an approved SLP is, strictly speaking, that strict compliance with the Guideline, Mandatory Code of Practice
a contravention of s25(2)(f) of the MPRDA and may result in a non- on the Mitigation and Management of COVID-19, MWP and SLP, to
compliance directive and order being issued by the DMRE. mention a few, be monitored. ◆
It is anticipated, therefore, that over the next 18 months, mining right
holders may need to consider the necessity of submitting applications in Nupen is a Director, Limberis-Ritchie and Murdock Senior Associates
terms of s102 of the MPRDA to amend their MWPs and SLPs to cater and Matlala a Candidate Attorney with Nupen Staude de Vries.
COVID-19/Companylaw
Taking stock of virtual
shareholders meetings
JOHANN PIEK
biggest concerns revolved around shareholder engagement and how the com-
T
he long-awaited, large scale shift to virtual share- panies dealt with (or failed to deal with) shareholder questions. Irregularities
holders meetings (VSMs) has finally commenced. reported during the 2020 AGM season included instances where:
Granted, it took a once-in-a-lifetime pandemic to shareholders were only afforded an opportunity to submit questions
move meetings into cyberspace, but the metaphorical prior to the AGM, with no questions being accepted during the AGM;
wheels have, at long last, been set in motion. questions submitted prior to and/or during the AGM did not elicit
answers; and
management was perceived to “cherry pick” favourable questions or
answer “company-generated” questions.
Lessons learnt and fears realised
Several lessons were learnt during the 2020 annual general meeting (AGM) These issues were not exclusive to South African VSMs. In a review of
season, which proved to be a litmus test extraordinaire for VSMs. Electronic the 2020 US proxy season, Professor Miriam Schwartz-Ziv of the Hebrew
platforms utilised by South African companies held up remarkably well – save University of Jerusalem, found a general lack of transparency regarding
for a lone AGM at which sound “gremlins” were experienced. Shareholders shareholder questions asked at VSMs. In her research, she highlighted
and guests attending the VSMs also managed to navigate the often-complicat- five tactics used by a number of S&P 500 companies to evade addressing
ed instructions to attend these meetings with relative ease. Overall, SA compa- shareholder questions. These tactics included:
nies (and company secretaries, in particular) did a commendable job, consider- misrepresentations that “no further questions had been received” where,
ing the logistical uncertainties brought about by the lockdown level changes. in fact, the statement only applied to the questions received by manage-
The VSM roll out was, however, far from flawless. Undoubtedly, the ment to answer at the VSM, and not to the questions which were notMarch 2021 13
COVID-19/Companylaw
the AGM agenda onto the company’s website in advance, or, at the
very least, display it on the main meeting page, along with a marker
keeping track of the progress.
5. All AGM attendees need to be prepped on how and when to mute
and unmute their electronic devices. Addressing this matter at the
start of the AGM could spare serious embarrassment.
6. The full board of directors should attend the AGM and make them-
selves visible once they are introduced by the chairman. Despite its
digital nature, formal AGM
etiquette needs to be upheld.
7. Unlike “in person” shareholders
meetings, shareholders are not
able to have informal chats
with management pre – and
post-meeting. Add to this the
fact that AGMs are often the
only opportunity for sharehold-
ers to engage with management
and it is thus essential that suf-
ficient time be allocated for
shareholder questions and
engagement.
passed onto management;
8. Shareholders should be able to
undertakings to get back to shareholders on unanswered questions, but
submit questions to the company Piek
not following through;
prior to the AGM. Make a
the imposition of early deadlines to submit questions; and
facility (like an investor page on the company website) available to
shortening the time allocated for Q&A at the AGMs.
receive and answer questions before the AGM. This will not only
While management is under no obligation to answer shareholder ques- give management a feel for the type of questions to expect at the
tions, the obfuscation and evasion of shareholder questions does speak AGM, but also an opportunity to display their commitment to trans-
volumes about a company’s approach towards shareholder relations and parency.
good corporate governance. Needless to say, certain shareholders were 9. Post the questions asked and answers given at the AGM on the
quick to voice their concerns where they felt their questions were altered, investor page of the company’s website after the AGM.
or even worse, disregarded. 10. Hearing is not seeing. Non-verbal cues such as eye rolls, head nods
and a shrug of the shoulders often speak louder than words. For a
Bettering best practices company to truly make the VSM inclusive, it needs to make provi-
The proliferation of VSMs saw several best practice guides being pub- sion for video.
lished by working groups across the globe. Locally, the non-profit share- 11. Most importantly, companies should continue to operate within the
holder activism organisation, Just Share, published a very useful best prac- confines of the law. Companies need to ensure that the electronic
tice guide to assist SA companies with their virtual AGMs in 2020. communication employed enables all participants to communicate
The following practices, which should be read in conjunction with the concurrently with each other without an intermediary, and to par-
aforementioned guides, could serve as a useful starting point for SA com- ticipate reasonably effectively in the AGM. Furthermore, AGMs of
panies persisting with virtual AGMs in 2021. public companies must afford shareholders the opportunity to raise
1. Get Shareholders Online. Hassle-free. Instructions on how to attend, matters at the AGM, with or without advance notice to the company.
ask questions and vote at the AGM must be clear and comprehensible.
2. Despite living in the digital age, not all shareholders are tech profi- Will 2021 be the “make or break” year for VSMs in South
cient. Have an allocated technical support line available from the Africa?
moment the instructions are sent out until the conclusion of the The emergence of the second wave of COVID-19 will likely force SA
AGM. The support line details should be included in the instruc- companies to continue with VSMs for the foreseeable future. This will, in
tions, and be visible during every stage of the online log-in process. turn, present a golden opportunity for companies to allay the VSM-related
3. Prepare and upload a “rules of conduct” document onto the company concerns raised by shareholder interest groups in 2020 and, ultimately, to
website. This document should address important matters such as realise the many benefits that VSMs currently present. However, only
time allocated for questions, how questions will be selected, and time will tell. ◆
when questions will be out of order.
4. It’s hard to follow the progress of a meeting electronically. Upload Piek writes in his personal capacity.14 March 2021
COVID-19/Companylaw
Business Rescue during the COVID-19
pandemic – how to make it work
KYLENE WEYERS
Many struggling companies are in complete denial and won’t
S
outh Africa, and the world at large, is being rocked acknowledge that either a complete restructuring of the business
by the COVID-19 pandemic. One of the hardest or a formal business rescue process may be the only viable option.
hitting consequences of COVID-19 is its impact on For companies that are in denial, we first and foremost urge them
businesses throughout the country. COVID-19 is causing to take a reality check, to accept that they are already in financial
distress, and that something
severe financial distress for many businesses in South
urgently needs to be done.
Africa, both big and small, and almost no sector remains
It is obviously a very tough
untouched. reality for some directors
and shareholders to face,
because they have invested
Therefore, in addition to the pandemic’s impact on the health and well-
so much time, money and
being of people, and their day-to-day lives, the pandemic is wreaking
effort into their business
havoc on the South African economy. 2020 saw many companies file for
over the years, and now
business rescue or liquidation, and with the ongoing lockdowns and
they have to make the diffi-
restrictions, we can expect another wave in 2021.
cult decision to possibly
This article discusses when business rescue, as a mechanism, works for
place the company in res-
companies that require saving, and when it doesn’t.
cue. However, for those
directors who take action
Business rescue vs liquidation
sooner rather than later,
Business rescue is defined as “proceedings to facilitate the rehabilitation of a
business rescue is more likely Weyers
company that is financially distressed.” This is done through an appointed
to work, and the business
business rescue practitioner (BRP) who will prepare and implement a
will be saved in the long-term.
business rescue plan.
It makes a big difference when a company seeks qualified help as
When applied correctly, and in the right circumstances, business rescue
soon as possible. Directors should consult with specialists to anal-
can successfully save a business. By ‘save’ the business, s128 of the Companies
yse their financial position and advise whether they should con-
Act (71 of 2008) envisages that either the company will continue to operate
sider a more informal restructuring of the business first, or
on a solvent basis or, at the very least, that business rescue will yield a better
whether the company is a candidate for a formal business rescue
return for the company’s creditors than an immediate liquidation.
(or even liquidation).
Where a company’s financial position is so dire that it is no longer able
to continue trading, it must be liquidated. The purpose of liquidation is to 2) It enjoys the support of the majority of creditors.
wind up the company’s affairs by selling its assets, either by way of private Business rescue is a creditor-driven process. If the majority of cred-
treaty or public auction, to pay the costs of its winding up and its creditors. itors are not on board, then a company may be wasting its time in
There is no magic formula to apply when deciding whether a company pursuing business rescue. It is of utmost importance that a compa-
should be placed in business rescue or go into liquidation. As restructur- ny’s larger creditors, like banks and major suppliers, are on board.
ing professionals, we look at each company on a case-by-case basis, and In many cases, creditors will assist if they sense that the debtor
analyse its financial situation to determine the appropriate way forward. company is being open and transparent, is willing to pay, has con-
Under which circumstances is business rescue more likely to work, and structive proposals and has a better chance of recovery if a busi-
which elements need to be present for business rescue to be successful? ness rescue plan is implemented (as opposed to the company
being liquidated).
Business Rescue is more likely to work under the following It is very important for a financially distressed company to have
circumstances: an open and honest discussion with its suppliers and creditors, to
1) It is not left too late! assess whether they can work out an agreement on the best way
Far too many businesses struggle on for too long, and leave noth- forward. The lines of communication need to be kept open. In
ing to save. Timely intervention is absolutely essential. practice, if a company (or a BRP on behalf of the company)March 2021 15
COVID-19/Companylaw
proactively approaches the major creditors with a sound plan to Companies in business rescue do generally need to down-scale
improve the company’s financial situation, to repay its indebted- their business operations, but there needs to be a business to run.
ness, creditors are more likely to support the process. This of course requires money. The company will need to have
existing cash flow or reserves to help the company trade. Business
3) There is a real plan to save the business or, at least, viable compo-
rescues are a lot more successful when the company or BRP is
nents of that business.
able to increase cash flow by cutting costs and reducing unneces-
A company may only file for business rescue if there is a “reason-
sary spending. This may mean, for example, disposing of non-key
able prospect” of the company being saved.
assets, letting go of staff, cutting the marketing spend or cutting
The question of what a reasonable prospect entails has been con-
down on general operating costs.
sidered widely by our courts since the inception of the business
It is also important for a company to concentrate its efforts on the
rescue provisions. The courts have provided a guideline and indi-
business’s best customers. Focusing on the company’s most reliable
cated that there has to be a prospect, based on reasonable
and profitable customers is a very effective method of improving
grounds, and on concrete and objectively ascertainable facts.
the company’s cash-flow.
The most successful business rescues happen when the stakehold-
One of the most crucial aspects of a business rescue’s success is the
ers sit down in advance and plan the rescue before actually initi-
company’s ability to obtain Post-Commencement Finance. It will
ating the formalities – this is the so-called “pre-pack”.
not be possible for many companies to be saved without it.
4) The company’s books and records are up to date. From a creditor’s perspective, even if the business cannot be
For companies that have their books and records up to date, it is a saved, assets can still be realised more optimally, economically
lot easier and quicker to determine the company’s financial posi- and efficiently in a business rescue than would be the case in liq-
tion and to timeously work out the best plan to restructure its uidation – so, regardless, it is a better route to follow, since credi-
affairs. tors control it and can drive the process.
When a company’s books and records are up to date, a BRP is
Business rescue is more likely to work for a company if many of the
more quickly able to determine what the company’s assets, liabili-
elements discussed in the article are present. If these elements are not
ties and monthly expenses are, who the creditors are and what is
present and the company files for rescue, it may just become a costly and
owing to the creditors, who the debtors of the company are and
stressful waiting room for insolvency. ◆
what is owing to the company etc.
5) The business is able to run, even if in reduced form, during busi- Weyers is a Senior Associate with
ness rescue. Cliffe Dekker Hofmeyr.You can also read
